Board acts to restore district bond rating

Bond ratings, perfect ACT score and canned goods were among the matters considered at the Dec. 17 meeting of the Cabot School District board of directors.

Board members Mark Russell, Corey Williams, Brian Evans, Wendel Msall, Donna Nash, Ricky Hill and Dean Martin attended the meeting, as well as superintendent Tony Thurman and other school district staff members.

High school senior Kyle Cox was recognized for his perfect score of 36 on the ACT; Cox is one of only five students in Arkansas to make the score.

Aaron Randolph, GT and AP program director, made the presentation.

Cox said he had taken the test spending a large part the prior night playing video games, and it was the third time he took the test with previous scores of 33 and 34.

Cox said he has been accepted at Vanderbilt University but is undecided between studying in either engineering or health care.

"After you made 34, what possessed you to take it again," Russell remarked.

"One of my friends made 35," Cox replied.

Westside Elementary principal Lisa York and counselor Brenda Phillips were presented a trophy by Kimberly Buchberger of Hope’s Pantry and Closet, for the school’s collection of canned goods for the food closet.

"Westside kind of whomped everyone this year," Buchberger said of the competition between schools. Students and staff at Westside collected more than 10,000 food items, she said. "It was so amazing."

Buchberger said Westside students and parents had been very involved in the competition, and York said there are teachers at the school, "Who are very competitive."

School district total is "20,000-plus," Buchberger said.

In construction progress, Jeffcoat said the Ward Central Elementary School expansion is essentially complete. The lights, flooring and ceiling tiles are installed, "Really, the only thing we lack now is just waxing the floor and getting the tables in," he said.

At the Freshman Academy, the school district technology department is installing all the wiring and fiber cable as well as making all the connections for the computer networks, Jeffcoat said. The "hub," where all the classrooms will tie into the system, "is just amazing," he said.

Most of the millwork for the hallways and counseling center has been delivered, Jeffcoat said.

Thurman said Ward mayor Art Brooke has spoken of wishing to have an opening ceremony for the expansion of the school facilities. "[Ward] takes a lot of pride in that school, it was very nice of them to want to do that," Thurman said.

A formal opening of the cafeteria expansion is expected to be in January, Thurman said.

Under business matters, Jack Truemper, Stephens, Inc., Little Rock office senior vice president, explained the affect Act 110 of 2013 has in restoring the Cabot School District bond rating, which was among ratings withdrawn recently by bond raters.

Act 110 was needed because changes in the ratings process had led to the withdrawal of the previous AA3 rating given school district bonds, Truemper said.

The withdrawal was not a reflection on individual school district’s ability to pay, but on Arkansas’ "state intercept program," which allows the state to make school district bond payments should a school district be unable to make the payment.

Bond raters had a problem with the intercept program being "post-default," or taking place after a bond payment is missed. The previous rating of AA3, "a good rating," was based upon bondholders being paid on time, Truemper said. The withdrawal was done even though, to his knowledge, the program has not been used in at least 14 years, he remarked.

Act 110 changes the state intercept program from "post default" to "pre-default" by requiring the bond trustee be given payment at least 5 days before the due date. If the trustee does not have the payment at that time, then the state can take action to ensure the bondholders are paid on time, Truemper said.

The district is still required to make payment, but the amount is owed to the state rather than the bondholder, he said.

With the change under Act 110, the bond rating can be restored at AA2, actually a better rating, Truemper said.

Interest on the bond-payment funds might be lost to the district but the amount would be minimal and, considering the effect on future bond issues, acceptable, Truemper said.

However, it falls to the school district to adopt a resolution agreeing to place all existing rated-bond debt under the provisions of Act 110, Truemper said. Agreeing to the provisions will reinstate the school district bond rating with the new, better, rating, he explained.

Not adopting the resolution would have no affect on current bond debt, but could make future bond issues doubtful. Most, if not all, financial institutions will not buy non-rated bonds, Truemper said.

Thurman said adopting the resolution would have no affect on the district’s cash flow, "It is that we would make payment a little earlier than we typically would." Also, the better bond rating would be advantageous for the district because with the better rating comes lower interest rates, he said.

School board members voted to adopt the provisions of Act 110.

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